RATE OF EXCHANGE

Hawke's Bay Tribune, Volume XXIII, Issue 16, 30 December 1932, Page 5

RATE OF EXCHANGE

EFFECTS OF INCREASE. MOTOR TRADERS’ VIEWS x The poJsihle results of on increase in the rate of exchange on the motor traders of the Dominion are set out in a circular drafted bv the New Zealand Motor Trades Association. “The motor trade is < sm-ci.-iHv interested. as .it is hopin - ' • increased business as tenoral com improve, and if some reduction in the heavy duties can be secured,’’ says the circu-

lar. "An increase in the rates of exchange at the present time must increase the cost and prove a further restriction to buying which would not be offset, at least for some time, by the increased price received by the farmer lor his produce. "It is not generally known that the rate of exchange on some of the English cars pnported is pegged by the manufacturer below the present market rate as a help in stimulating the demand for English cars. An increase in the rate as proposed would make it impossible fo< the English manufacturer to continue to carry this loading, and the cost of English cars would be saddled with a higher increase than that it was proposed to adopt. "The question of exchange is intricate, and is not generally understood, and there are strong arguments both for and against a high rate of exchange which under some circumstances would be beneficial. We believe, however, the rate, be it high or low, should be fixed by the law of supply and demand, and that it is unsafe for politicians to meddle with it. We suppose members of Parliament had the best of intentions in raising this question at the present time, but their action has had a most unsettling effect on business, which was difficult enough without this further complication.’’